30 July 2014

Taylor Wimpey plc

Half year results for the period ended 29 June 2014

Highlights

·     Strong progress made towards medium term targets for the Group:

o  Operating profit margin* up 300 basis points to 16.1% (H1 2013: 13.1%)

o  Return on net operating assets** up 350 basis points to 17.8% (H1 2013: 14.3%)

o  Tangible net asset value per share^† increased by 9.5% to 73.6 pence (H1 2013: 67.2 pence)

·     Completed 5,766 homes across the UK, up 11%, with a 10% increase in total average selling price to £206k

·     Acquired 4,336 plots in the UK short term land market in quality locations

·     Worked with communities, planners and landowners to convert a record 7,195 plots from the strategic pipeline in order to develop much needed new homes across the UK

·     Contributed c.£116 million to local communities across the UK via planning obligations

·     Maintenance dividend up 9% reflecting increase in net assets

·     2015 cash return increased by £50 million to £250 million

Pete Redfern, Chief Executive, commented:

"Our strategy, coupled with the improvements in the UK housing market, has enabled us to significantly improve the quality of our financial performance, whilst delivering sustainable growth of much needed new homes and contributing £116 million to local communities. In early July we began our cash return to shareholders, a key part of our active management of the cycle, and with confidence in the underlying strength and future performance of the business, we are pleased to announce that we now plan to increase our July 2015 payment."

Group strategy

Since we re-entered the land market in 2009, we have invested strongly at the right time and are now at our optimum size of landbank, with record conversion in the last few years of our strategic pipeline adding to the landbank in scale, quality and future profitability. The average selling price in the UK short term owned and controlled landbank in the first half of 2014 has increased by 16% to £211k, driven by the quality of additions and the improvement in the housing market.

We operate in a cyclical industry, where active management of the cycle not only creates value for our shareholders and our other stakeholders, but also crucially protects it. We are currently operating in a balanced housing market, and believe we are in the early stages of the housing cycle. We still see attractive opportunities in the land market and will continue to invest where we can create value, however as we have previously announced we are now moving into a broadly land replacement position in the land market and into a phase focused on delivery.

To reflect this, in May 2014 we announced a new and enhanced set of financial targets for the period from 2015 to 2017, to challenge the business to deliver more over the medium term.

These targets, each of which are applicable for the period from 2015 to 2017, are to achieve:

·     An average operating margin* of 20% over the three year period

·     A return on net operating assets** of at least 20% per annum

·     An average increase in net assets (including returns to shareholders) of 15% per annum over the three year period

·     An average conversion of at least 65% of operating profit into operating cash flow*** over the three year period

In particular, the focus on converting a high proportion of our profitability into cash is an important measure for this stage of the cycle, and our strategy, and we are committed to returning significant cash to investors. Whilst earnings metrics are important measures of quality, they are neither always reflective of future opportunity, nor of risk. When we set out the principles of our cash return plan in February 2014 the Board stated that they did not consider it appropriate to tie all shareholder returns to traditional income statement measures only. Our dividend and cash return strategy therefore comprises two elements: a regular maintenance dividend, which is deliberately set as a through the cycle measure and which remains unchanged at 1% to 2% of net assets, and surplus cash returns at the appropriate time in the cycle. We will pay additional surplus payments to shareholders over the medium term taking into account profitability, investment strategy and cyclical risk.

On 3 July 2014 we returned £49.7 million to shareholders, equating to 1.54 pence per share. With operating cash generation improving and land payments still to be made, we have stated before that we consider 2014 to be a transitional year with significant cash surpluses expected to be generated from the second half of the year onwards. We have, however, continued to outperform our own expectations, both in terms of cash generated and importantly our forecast cash expectations, with reduced cash requirements for land and work in progress investment. Therefore, the 2015 cash return will be increased by £50 million to £250 million, equating to c.7.68 pence per share, subject to shareholder approval. This will be paid in July 2015 in line with the working capital requirements of the business. It is proposed that, subject to regulatory requirements, shareholders will be able to choose to take the return of cash either as income or capital through a B-class share scheme. Underpinned by the strength and quality of our landbank and strategic pipeline, going forward we continue to expect that these cash return payments, in addition to the maintenance dividends, will be at least £200 million per annum for the medium term and will also offer potential upside in line with the cash generation of the business.

Future cash returns to shareholders will be announced on an annual basis at the half year results, when we have good visibility in terms of order book position and market conditions, and will be paid the following July subject to shareholder approval. The next update will therefore be at our 2015 half year results, in or around July 2015, for the 2016 cash return, which will be paid in July 2016.

Current trading and outlook

In the first six months of 2014, we have seen the positive benefit of the improved environment in all of our regional markets. Particularly in the second quarter, we have seen greater balance between the regions, with increases in sales prices and sales rates outside of the strong London and the South East markets.

Visitor levels have continued to be strong and confidence remains good amongst customers.

The net private sales rate in the first half of the year was 0.71 (H1 2013: 0.67) with a return to traditional seasonal patterns, which we believe will include a slower summer period. We are now operating in a 'normal' and healthy market, and believe this should sustain an annual sales rate of around 0.70.

The market risk in the short term has substantially reduced in the first half of the year, with the extension of Help to Buy to 2020 and policy makers focused on a longer term view of managing risk and protecting growth.

Our strategy has been set to position the business to perform well across the cycle. We will continue to benefit in the improved market conditions that we are seeing. In addition to making good progress towards our medium term targets, we have continued to invest in the business to ensure a growing and sustainable future for 2015-2017 and beyond. We are focused on working with local authorities, land owners and communities to promote the sites that we own and control through the planning process and continue to open outlets as soon as we have implementable planning permission. This ensures we add the most value to our total land portfolio which, at current prices, stands at a potential c.£35 billion in revenue as at the end of June 2014. In 2014, we expect to deliver a Group operating margin* increase of at least 300 basis points, and a return on net operating assets** of at least 20%. We will deliver growth towards our medium term targets in the next few years in a healthy and balanced way, ensuring quality for our customers and communities and the quality and sustainability of returns for our shareholders.

* Operating profit is defined as profit on ordinary activities from continuing operations before finance costs and exceptional items, after share of results of joint ventures.

** Return on net operating assets is defined as 12 month rolling operating profit divided by the average of the opening and closing net operating assets, which is defined as capital employed plus intangibles less tax balances.

*** Operating cash flow is defined as cash generated by operations before taxation and interest paid.

† Tangible net assets per share is defined as net assets before any accrued dividends excluding goodwill and intangible assets divided by the number of shares in issue at the period end.

-     ends  -

A presentation to analysts will be hosted at 9.00am on 30 July 2014. This presentation will be broadcast live through our website  www.taylorwimpey.co.uk/corporate 

For further information please contact:

Taylor Wimpey plc                                                                  Tel: +44 (0) 7826 874461

Pete Redfern, Chief Executive

Ryan Mangold, Group Finance Director

Debbie Sempie, Investor Relations

RLM Finsbury                                                                          Tel: +44 (0) 20 7251 3801

Faeth Birch

Sarah Heald

Notes to editors:

Taylor Wimpey plc is a UK-focused residential developer which also has operations

in Spain. Our vision is to become the UK's leading residential developer for creating

value and delivering quality.

For further information, please visit the Group's website:

www.taylorwimpey.co.uk

Follow us on Twitter @TaylorWimpeyplc

Operational review

Taylor Wimpey plc is a UK focused residential developer, with a small operation in Spain. Our operational review is UK only as the majority of metrics do not apply to the Spanish business. The financial analysis is presented at Group level which includes Spain, and is followed by a short summary of the Spanish business.

Our key performance metrics

Sales, completions and pricing

We completed 5,766 homes in the first six months of the year, up 11% (H1 2013: 5,191). This comprised 4,755 private completions (H1 2013: 4,229), 940 affordable (H1 2013: 930) and 71 joint venture completions (H1 2013: 32).  In the first half of this year, 37% of our completions were from land sourced from the strategic pipeline (H1 2013: 28%).

The average selling price of completions also increased by 10% to £206k (H1 2013: £188k), driven by the strength in the private completions. The average selling price of private completions increased by 9% to £224k (H1 2013: £205k). This increase is due to our continued weighting towards better quality locations and the benefit of the wider housing market improvement.

During the first half of 2014, we achieved an average private net reservation rate of 0.71 per outlet per week (H1 2013: 0.67), demonstrating the benefit of the traditionally strong spring selling season. Cancellation rates remained low at 11% (H1 2013: 14%). 

During the period we operated from an average of 307 outlets (H1 2013: 312).

The total order book, as at 29 June 2014, excluding completions to date and joint ventures, is at an optimal level, with reservations averaging approximately five to six months ahead of completions, representing 7,587 homes (30 June 2013: 7,101 homes), of which 64% were private homes (30 June 2013: 62%). The total order book value also increased by 26% and stood at £1,584 million at 29 June 2014 (30 June 2013: £1,255 million). This reflects the continued strong private order book at £1,283 million as at 29 June 2014, up 35% (30 June 2013: £948 million) with private average selling prices up 21% year on year. Again this can be attributed to our underlying shift to better quality locations, the wider positive market impact and the impact of our London market business.

Land and planning

Our focus on value starts with our land acquisition and is the basis for all of our investment decisions. Our land buying is broadly spread across the country, typically 60% weighted towards the south, but most importantly in places supported by strong demographics and in the villages, towns and cities where people want to live.

During the first half of 2014, the land market remained disciplined and balanced. Land prices have, overall, moved in line with house prices, although we continue to source and secure attractive opportunities, without compromising on margin. During the period we acquired 4,336 plots in the short term land market at operating margins similar to 2013. As we have previously signalled, as competition inevitably increases over the medium term we will move from the land investment stage of the cycle into a more land replacement position within the short term land market. We have land identified into and beyond 2017 and as such are able to be very selective. In the first half of the year, we worked with local authorities and communities to convert a further 7,195 plots from the strategic pipeline, a record for Taylor Wimpey. This is in excess of our medium term conversion target of c.6,000 plots per annum. In this planning constrained environment, we believe we are at our optimum scale of short term landbank for this stage of the cycle at c.75,000 plots. Given our success with the strategic pipeline, and the larger size of sites sourced through a strategic route, we see this naturally remaining high, even as we continue to grow our completions to the optimum scale for our business of approximately 14,000 completions. This gives us increased choices and opportunities and we will pursue land disposals on larger sites where we can achieve best value.

Land spend in the UK, including land creditors, was £374.1 million (H1 2013: £233.0 million). We remain focused on achieving the best value and securing the best terms and we will use a variety of structures, including land creditors, to do this.  

We have the largest strategic pipeline in the sector and this remains a key differentiating factor, giving us both increased flexibility and land supply secured at a discount. Our ability to manage our cash flows in this way also means the teams across the business are under less pressure in the short term land market. The strategic pipeline stands at 107,630 potential plots (30 June 2013: 101,566), underpinning our confidence in delivering sustainable margins through the cycle by protecting the quality of the short term landbank. We continue to invest in this for the long term future and in the first six months of the year we added 9,704 new potential plots to the strategic pipeline.  Our aim is to increase completions from the strategic pipeline to over 40% per annum in the medium term. With 54% of our landbank now comprising strategically sourced land (H1 2013: 48%), we are well placed to deliver on this aspiration.

We continue to open all new outlets with implementable planning permission as soon as possible. The planning process, in the round, has remained slightly easier than during the last cycle, however we continue to carefully monitor the time taken to satisfy final stage pre-commencement development conditions which has increased. We are continuing to benefit from our effective approach to community engagement processes that we have in place on each of our sites. We are particularly pleased to have been short-listed in the Best Community Initiative category for our extensive community engagement programme and also shortlisted in the Most Sustainable Housebuilder category in the Housebuilder Awards 2014.

Build costs and efficiency

The improved market has resulted in some build cost increases, as anticipated, however these are being maintained at manageable levels. In the first half of 2014, commodities have stabilised as manufacturing has stepped up to keep pace with the growth of the industry. Our key focus has been on assuring security of supply for our key materials, including bricks which we have now secured around 18 months ahead of build schedule. Inevitably labour cost inflation has also increased, albeit in a controlled and manageable way. As at the end of June 2014, our new house type range was plotted on over 70% of sites. This, in combination with our national deals and our scale, will help mitigate expected build cost inflation.

Our supply chain logistics business, Taylor Wimpey Logistics, is a particularly important part of our supply chain management in the current, improved environment. Taylor Wimpey Logistics source bulk materials directly from manufacturers generally using national contracts, providing us with an alternative route to delivery and aiding efficiency with the preparation of 'just in time' build packs for each stage of the building process.

We balance our culture of driving continuous improvement with a desire and focus to continue to improve our asset efficiency. We have improved our UK net operating asset turn to 1.20 times (H1 2013: 1.19) and routinely look at opportunities on sites which we already own, to assess possible ways of bringing forward the delivery of much needed new homes. Over the next year we will be working to ensure a steady flow of completions during each period, which will have a significant impact on our internal business efficiency, delivery of good customer service and management of costs.

Health and safety

The health and safety of individuals on our sites is our non-negotiable top priority. We are committed to providing a safe place in which our employees and subcontractors can work and our customers can live. We have continued to keep our Annual Injury Incidence Rate low at 100 per 100,000 employees and contractors in the first half of 2014 (H1 2013: 90).

People and skills

Ensuring we have the right people with the right skills at all levels in our organisation is critical to our success. We currently directly employ 3,834 people across the UK and our employee turnover rate remains low at 7% (H1 2013: 5%). Over the last few years we have invested in our future success through our employee learning and development, including training programmes and apprenticeship schemes, and we are starting to see benefits of this consistency of approach. We have also been assessing how we reward staff. During the period we introduced an enhanced employee discount scheme when buying a Taylor Wimpey home to reward long term loyalty of our employees. We believe this scheme, offering up to 20% discount, subject to certain criteria, is the best in the industry and will make a difference to many of our staff across the business.

Our site managers won a total of 70 Quality Awards (2013: 68) in the National House-Building Council (NHBC) Pride in the Job Awards 2014, reflecting our commitment to build quality.

Customers

During the first half of 2014 we achieved a customer satisfaction rate of 85.9% (H1 2013: 88.0%). Whilst this remains high in comparison to historic trends, we are disappointed that this has decreased. This is a very important area for us and it will continue to be a key focus for 2014.

The Help to Buy equity loan remains very popular with our customers. During the first half of 2014 we completed approximately 42% of private homes through the scheme and worked with 2,000 households to take the first step to home ownership or to move up the housing ladder. Approximately 70% of sales through Help to Buy were to first time buyers in the first half of 2014.

Financial review

Revenue from continuing operations increased by 18.2% to £1,190.1 million in the first half of 2014 (H1 2013: £1,007.1 million) driven by much improved selling prices, with UK average selling price up £18k to £205.6k, as well as higher volumes up 10.4% to 5,695 completions (H1 2013: 5,159), excluding joint ventures. The UK private selling prices were up £19k to £224.1k (H1 2013: £205.2k) which benefited from mix of product and improved quality of locations.

Total UK land cost per completion as a percentage of selling prices for the first half of 2014 was 21.5% (H1 2013: 20.9%) reflecting the product mix and increase in volumes from the London market. The UK land cost per unit sold at £44.1k is higher than £39.2k in the prior year reflecting the better quality locations traded from in 2014 that contributes positively to the sales price growth.

Build cost per unit in the UK increased to £109.3k (H1 2013: £103.5k) reflecting higher quality mix driven product specification and the impact of build cost inflation. We anticipate that build cost inflation should somewhat reduce as the industry adjusts to the increased labour and material demand, and it is pleasing to note additional capacity for key supplies being brought back following more certainty of the continual supply of housing. Other direct costs and selling expenses per unit have marginally increased to £6.9k (H1 2013: £5.3k).

The increase in selling prices marginally offset by land and cost increases has led to a UK contribution per completion of £45.3k for the first half of 2014, an increase of 14.4% (H1 2013: £39.6k).

Gross profit, before exceptional items, of £259.4 million (H1 2013: £197.0 million) increased by 31.7% and included a positive contribution of £6.0 million (H1 2013: £22.4 million), relating to realisation of written down inventory above its originally estimated net realisable value, where the combination of selling prices and cost, or mix improvements have exceeded our original market assumptions. These amounts are stated before the allocation of overheads excluded from the Group's net realisable value exercise.

In the first six months of the year 16% (H1 2013: 35%) of the Group's UK completions were from sites that had been previously impaired. In Spain 12 plots (H1 2013: 25) were completed that had previously been impaired. The Group anticipates that c.15% of short term owned and controlled impaired plots will complete in the second half of 2014.

Operating profit* increased to £192.1 million (H1 2013: £132.4 million), delivering an operating margin* of 16.1% (H1 2013: 13.1%). These improvements have been driven by the ongoing benefits of timing and quality of our short term land acquisitions and by our promotion of strategic land. We expect to continue to make strong progress towards our medium term target of an average of 20% operating margin for 2015-2017.

Pre-exceptional net finance costs for the period were £13.7 million (H1 2013: £23.4 million), benefiting from lower average net debt in the period and the repurchase of the outstanding £149.9 million of the £250 million 10.375% Senior Notes in December 2013.

Pre-exceptional profit before tax for the period from continuing operations increased by 63.7% to £178.4 million (H1 2013: £109.0 million). The pre-exceptional tax charge was £38.2 million (H1 2013: £21.7 million) with an underlying tax rate of 21.4% (H1 2013: 19.9%), largely reflecting the statutory tax rate for the period.  

This resulted in a profit, before exceptional items from continuing operations, for the period of £140.2 million (H1 2013: £87.3 million).

Basic earnings per share were 4.7 pence (H1 2013: 3.6 pence). The adjusted basic earnings per share for continuing operations were 4.3 pence (H1 2013: 2.7 pence), up 59.3%, reflecting the strong improvement in trading and more efficient debt structure following the Senior Note repurchase in December 2013.

At the half year the Group completed a net realisable value assessment of inventory and with the improved market conditions, and increased profitability on a number of our previously impaired sites, the Group has recorded a net reversal of £18.9 million of inventory write-downs in the UK (H1 2013: £34.1 million). The net reversal in the UK consisted of a reversal of previous write-downs of £23.4 million and additional write-downs to the lower of cost and net realisable value of £4.5 million. The net impairment release of £18.9 million as at 29 June 2014 will reduce second half profitability by approximately £5.4 million.

Net operating assets were £2,237.1 million (30 June 2013: £1,958.2 million), reflecting a net investment of £417.0 million (H1 2013: £147.4 million) year on year in land and work in progress, funded mostly by profitability in the period. Return on net operating assets** increased by 350 basis points to 17.8% (H1 2013: 14.3%), reflecting improved profitability and balance sheet discipline.

Group net operating asset turn increased to 1.18 times (H1 2013: 1.09 times) as a result of trading from better quality locations and focused land and work in progress investment.

Net assets at 29 June 2014 were £2.4 billion (30 June 2013: £2.2 billion). The net asset increase was driven by profitability in the period offset by the £22.1 million maintenance dividend paid for 2013 and the accrual of the £49.7 million cash return that was paid on 3 July 2014.

As at the balance sheet date the Group held inventory that had been written down to net realisable value of £422.8 million of which the balance in the UK was £392.6 million (31 December 2013: £459.9 million). As at 29 June 2014, the associated write-downs were £228.1 million of which the balance in the UK was £172.5 million (31 December 2013: £351.5 million).

As at 29 June 2014, 9% of our short term owned and controlled land was impaired (31 December 2013: 12%), with 68% of the short term owned and controlled landbank purchased post 2009, of which 56% has been sourced through our strategic pipeline, resulting in a land cost to average selling price in the owned landbank of 16.5% (June 2013: 18.8%).

The mortgage debtor balance was £111.1 million at 29 June 2014 (31 December 2013: £107.5 million), with the increase mainly reflecting further fair value gains of £4.0 million (30 June 2013: £nil; 31 December 2013: £5.5 million) partially offset by loan redemptions in the period.

Our deferred tax asset declined to £199.3 million (30 June 2013: £281.4 million), due to utilisation against profits in the period. The unrecognised tax losses in the UK of £17.4 million will be assessed at the full year results.

Net debt decreased to £36.2 million at 29 June 2014 from £68.4 million at 30 June 2013, having taken advantage of the continued benign conditions in the land market over the past year to invest a higher level of profitability in the landbank to reach the optimal scale for the business. We have also increased our investment in work in progress, including increasing our presence in the London market year on year. In the last 12 months, we paid £27.6 million in interest costs, including the redemption cost of the repurchase of the senior notes, paid £22.1 million in dividends and purchased £25.1 million of own shares for settlement of future vesting of share schemes. Average net debt for the half year was £139 million (H1 2013: £194 million). At 29 June 2014, the Group had total committed debt facilities of £650 million with an average maturity of four years, providing significant financial capacity.  

We continue to use land creditors as a way of funding land acquisitions where this makes the most commercial sense. Land creditors have increased slightly since the year end and, combined with net debt, results in adjusted gearing of 21.3% (30 June 2013: 18.0%).

The IAS19 pension deficit, including the post-retirement healthcare liability of £1.5 million (30 June 2013: £1.7 million), is £147.6 million at 29 June 2014 (30 June 2013: £175.4 million). The decrease in the deficit was predominantly due to asset outperformance and cash contributions paid into the scheme. We remain in dialogue with the pension scheme trustees on the initial valuation as at 31 December 2013 and related future deficit repair contributions.  

Spain

The housing market in Spain remains challenging, although the wider market environment is

now stable.

We completed 20 homes in Spain during the first half of 2014 (H1 2013: 27) at an average

selling price of €254k (H1 2013: €216k). The order book value was £65 million at 29 June

2014 (30 June 2013: £37 million), representing 284 homes (30 June 2013: 174 homes). Our

Spanish business is expected to make a small positive contribution to 2014 performance, with recently acquired sites adding to completions and profitability from the second half.

Dividends and return of cash

As set out earlier, our dividend and cash return strategy comprises two elements: a regular maintenance dividend, which is deliberately set as a through the cycle measure and which remains unchanged at 1% to 2% of net assets, and surplus cash returns at the appropriate time. We will pay additional surplus cash return payments to shareholders over the medium term with reference to profitability, investment strategy and cyclical risk.

The Board has declared an interim dividend of 0.24 pence per share. In line with the Board's policy, this interim dividend has been calculated with reference to the net asset value of the Group and is expected to represent around one-third of the total dividend for the year. This dividend will be paid on 25 September 2014 to shareholders on the register at close of business on 22 August 2014.

The Company offers shareholders the opportunity to use their dividends to purchase shares on the market under the terms of the Dividend Reinvestment Plan (DRIP). Elections to join the Plan must reach the Registrar by 31 August 2014 in order to be effective for this dividend. Further details can be found on our website www.taylorwimpey.co.uk

In addition, on 3 July we returned cash of £49.7 million by way of a special cash return, equating to 1.54 pence per share, to shareholders on the register at the close of business on 6 June 2014. We have also announced that £250 million will be returned to shareholders in July 2015, subject to shareholder approval. As previously confirmed, the DRIP will not be made available in respect of cash return payments.

Subject to shareholder approval and regulatory requirements, we propose to return cash through the issue of unlisted B-class shares. This arrangement known as a B-class share scheme, will allow shareholders, subject to applicable overseas restrictions, to choose between income, immediate capital, deferred capital or any combination of the three. A circular will be sent to shareholders with the 2014 Annual Report and Accounts, which will contain full details of the scheme and instructions to shareholders on how to elect to receive their proceeds of the cash return. We will seek shareholder approval of the scheme at our 2015 Annual General Meeting.

Risks and uncertainties

As with any business, Taylor Wimpey faces a number of risks and uncertainties in the course of its day to day operations. It is only by effectively identifying and managing these risks that we are able to deliver on our strategic objectives in the short term and also through the housing cycle.

In summary, these risks include: 

·     Government policy and planning regulations -The implementation of recent legislation (including the Localism Act, National Planning Policy Framework and the Community Infrastructure Levy (CIL)) are having a significant impact on the planning system and, with the recovering housing market, local authorities are increasing demands which could impact on the viability of projects. This together with the approaching Scottish independence vote and the general election means that political uncertainty is increasing which could impact the improving housing market.

·     Impact of market environment on mortgage availability and demand - Mortgage availability is a key constraint on demand in the UK housing market. The stricter lending rules, which came into force at the end of April following the Mortgage Market Review (MMR) and the increased likelihood of a Bank of England interest rate hike increasing the cost of mortgages, could translate into a decrease in the availability of mortgages resulting in reduced demand for housing.

·     Ability to attract and retain high-calibre employees -  As the economy improves there is an increased risk of employee turnover as a result of increased workload, perceived lack of career prospects, uncompetitive reward or lack of job satisfaction, potentially leading to business disruption, process failure and knowledge drain.

·     Material costs and availability of subcontractors - The recovery of the housing market with the associated increase in production could reduce the availability of materials and subcontractors resulting in the increase in costs above expectations.

·     Site and product safety - Building sites are inherently dangerous places. Unsafe practices by our employees or subcontractors have the potential to cause death or serious injury.

·     Land purchasing - The purchase of land of poor quality, at too high a price, or incorrect timing of land purchases in relation to the economic cycle could impact future profitability.

Further detail on the relevance of these risks to our strategy, the potential impact on key performance indicators, mitigation and responsibility are provided on pages 24 and 25 of our Annual Report and Accounts 2013, which is available from www.taylorwimpey.co.uk 

We maintain a Sustainability and Climate Change Risk and Opportunity Register to monitor other non-financial issues that could affect the Group.  More information is available in our Corporate Responsibility Report: www.taylorwimpey.co.uk/corporate/corporate-responsibility

Cautionary note concerning forward looking statements

This report contains certain forward looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking information.